After reviewing current economic developments, the National Bank of Serbia (NBS) Executive Board decided Thursday to raise the key policy rate by 25 basis points from 12,25 to 12.50 percent.

By raising the key policy rate, NBS is determined to ensure that the inflation will fall back within the limits of the target tolerance band in medium term, the NBS statement reads.

The NBS previously raised the key policy rate to 12,25 percent on March 10, 2011.

The NBS Executive Board assessed that the rise in agricultural product prices, at home and worldwide, and the resulting cost pressure on processed food prices is still the key generator of inflationary pressures. At the same time, the prices of non-food products are stable and in accordance with the targeted inflation.

The next rate-setting meeting of the NBS Executive Board will take place on May 12, 2011.